A. Schulman results down, but execs still looking up

FAIRAWN, Ohio—Materials maker A. Schulman Inc. posted lower results in the first half of its 2017 fiscal year, but officials remain optimistic about the firm's performance.

Schulman saw sales drop almost 6 percent to just under $1.2 billion in the six months ended Feb. 28. The firm's profit for that period slipped more than 10 percent to $8.5 million.

"We've stated this is a reset year," said Joseph Gingo, the company's chairman, president and CEO, in an April 4 news release. "However, I am highly encouraged with the steady progress we are making through the hard work of our teams."

He added that during the second quarter, Schulman saw strong results in Engineered Composites and experienced continued growth in its Asia-Pacific and Latin America segments related to improved product mix and strength in Performance Materials. The firm's European business also saw a year-over-year improvement in operating income despite the impact of foreign currency, helped by recent business simplification efforts, Gingo said.

"While our U.S. and Canada region remains challenged by complex plant consolidation efforts, which had been complicated by the Lucent matter, I am confident that we have solid action plans in place to drive future profitability," he said.

On a geographic level, Schulman's first-half sales grew almost 10 percent in Asia Pacific, but fell 7 percent in Europe/Middle East/Africa, almost 12 percent in U.S./Canada and almost 2 percent in Latin America. The EMEA region generated almost 49 percent of Schulman's first-half sales.

Based on products, the firm's Engineered Composites sales grew 6.5 percent for the half, but sales of Custom Concentrates and Services slid 5 percent and Performance Materials slipped almost 9 percent.

Looking ahead, Gingo said in the release that, as a result of potential foreign currency headwind, Schulman "is intensely focused on continuing to execute our strategy with a sense of urgency."

"We must deliver tangible benefits from our strengthened global sales organization and aggressively commercialize value-added products." he added. "I believe A. Schulman's expertise, technology and service sets it apart from our competitors. These distinctions will become even more evident as we progress into fiscal 2018."

Schulman is working to recover from a series of financial shortfalls connected to its $800 million purchase of Citadel Plastics. Those issues led to the ouster of CEO Bernard Rzepka late last year and to the return of Gingo, who had led the firm from 2008-2014.

Schulman is seeking damages from Citadel's previous owners after concerns were raised about some materials made at Citadel's Lucent Polymers unit in Evansville, Ind. Recycled-content compounds made by Lucent were unable to be reproduced at other Schulman plants because of faulty data.

Late last year, Schulman performed a comprehensive review of its operations with financial firm Citibank of New York. After the review, Schulman officials decided to move ahead with its existing businesses. In the last six months, the firm has announced expansions of its masterbatch concentrates units in China, Turkey, Hungary, Italy and Poland.

On Wall Street, Schulman's per-share stock price began the year near $34, but was at $31 in early trading April 5.

Schulman posted sales of $2.5 billion in its 2016 fiscal year, which ended Aug. 31. The firm ranks as a leading compounder and concentrates maker in both North America and Europe, and as one of Europe's leading resin distributors as well.